Most capital markets technology platforms that focus on workflow automation and instrument tokenisation are solely reliant on the Web2 parts of the stack. So even though instruments may be tokenized on a decentralised infrastructure, like public Ethereum, the assets and the on-chain smart contracts are limited to basic lifecycle events for such instruments. Furthermore, most of the instrument interaction and logic is performed completely on the Web2 platform. This is contrary to the way public DeFi infrastructure is evolving on Web3 i.e. where simple borrowing and lending lifecycles and exchange agreements can be completely managed on-chain with no dependence to any off-chain platform. 

While there are some institutional DeFi platform emerging, they simply replicate the current public DeFi protocols, and hardwire basic KYC/AML whitelists, but do not enable some of the more important aspects of an instrument to be managed on-chain e.g capital structures, optionality and other non-standard redemption processes. Furthermore, any changes due to complex off-chain credit events are next to impossible to manage on-chain with current Web2 and Web3 deployments. 

The future of true institutional DeFi is starting to emerge, as is being done by Clinaro, where flexible instruments can be deployed, which replicate the complex processes and logic of real-world instrument legal structures. While these advancements make it easier to bring true institutional capital markets to Web3, there are still a number of political, economic and technological factors that need to be overcome to drive wider adoption.